10/13/2003 @ 12:00AM

Cult of Personality

Keith Raniere’s devoted followers say he is one of the smartest and most ethical people alive. They describe him as a soft-spoken, humble genius who can diagnose societal ills with remarkable clarity. They say his teachings as an inspirational executive coach can empower some of the most successful people in the world to attain ever higher levels of status and money. Why, his program can even cure ailments like diabetes and scoliosis.

Some 3,700 people have flocked to Raniere, 43, and Executive Success Programs, the business he created in 1998. Prompted by a potent word-of-mouth network, they include Sheila Johnson, cofounder of Black Entertainment Television; Antonia C. Novello, a former U.S. surgeon general; Stephen Cooper, acting chief executive of Enron; the Seagram fortune’s Edgar Bronfman Sr. and two of his daughters; and Ana Cristina Fox, daughter of the Mexican president. Raniere’s disciples say his methods sharpen their focus and give them keener insight into the motivations of others. “It’s like a practical M.B.A.,” says one follower, Emiliano Salinas, son of a former president of Mexico.

Raniere, who has no M.B.A., has shrewdly cashed in on the high-profit fad of executive coaching, a booming multibillion-dollar market. It includes established firms and renowned individuals who promise–for a fee–to help people become better executives, improve productivity and navigate office politics. Well-known trainers like Marshall Goldsmith, professor Vijay Govindarajan of Dartmouth and Richard Leider charge from $25,000 a day to $100,000 for a half dozen sessions spread over 18 months. They teach executives how to change their “negative behaviors,” to find what drives them and to divine the right goals (see box below).

Win FriendsandInfluence People

In selling himself as an executive coach, Keith Raniere has tapped into a mother lode of demand. Here are some of the most respected players in this multibillion-dollar industry.

DAVID ALLEN

Helps execs manage time, minimize stress.

Clients: Merck, General Mills.

Fee: $10,000 for two in-person meetings and two follow-up calls.

MARSHALL GOLDSMITH

Helps leaders achieve a “positive change in behavior, for themselves, their people and their teams.”

But some people see a darker and more manipulative side to Keith Raniere. Detractors say he runs a cult-like program aimed at breaking down his subjects psychologically, separating them from their families and inducting them into a bizarre world of messianic pretensions, idiosyncratic language and ritualistic practices. “I think it’s a cult,” says Bronfman. Though he once took a course and endorsed the program, he hasn’t talked to his daughters in months and has grown troubled over the long hours and emotional and financial investment they have been devoting to Raniere’s group. One daughter, Clare, 24, has lent the program $2 million, at 2.5% interest, the senior Bronfman says (she denies this).

Raniere says there’s nothing in his operation that makes it a cult, and indeed, many enrollees see Executive Success as a good coaching program and nothing more. Enron’s Stephen Cooper puts himself in this category. Yet Raniere is an unlikely mentor to the wealthy and well-connected. A decade ago he ran an alleged pyramid scheme that collapsed after signing up at least 250,000 customers and bringing in more than $33 million in a year. In January a federal judge ruled in favor of an ex-girlfriend who was in a bitter legal fight with Raniere, citing “a jilted fellow’s attempt at revenge” and finding that Raniere had harassed her, disrupted her business and manipulated her into giving up her 10-year-old son to the boy’s father. The woman, Toni F. Natalie, tells Forbes that she believes Raniere brainwashed her, telling her she was put on Earth to carry his baby–the baby who would alter the course of history. Raniere calls this claim “ridiculous and not rational.”

These days Raniere prefers to be called “Vanguard” by his followers. (His business partner, Nancy Salzman, 49, a former nurse and therapist and the public face of Executive Success, calls herself “Prefect.”) Raniere’s long, brown hair and beard make him look a little like Jesus, and his thoughtful demeanor could let him pass for a philosophy professor–or maybe a slacker poet. He has no driver’s license, relying on friends for rides and walking up to 12 miles a day. He says he has no bank account and that he forgoes any salary from the $4 million-a-year coaching program he created: “I consider everything payment for what I’ve done.” Though he co-owns a small house near Albany, N.Y. with a female friend, he spends most nights at one or another of three friends’ homes. He claims not to own a bed. “I live,” he says with a disarmingly warm smile, “a somewhat church-mouse-type existence.”

His teachings are mysterious, filled with self-serving and impenetrable jargon about ethics and values, and defined by a blind-ambition ethos akin to that of the driven characters in an Ayn Rand novel. His shtick: Make your own self-interest paramount, don’t be motivated by what other people want and avoid “parasites” (his label for people who need help); only by doing this can you be true to yourself and truly “ethical.” The flip side, of course, is that this worldview discredits virtues like charity, teamwork and compassion–but maybe we just don’t get it.

Executive Success resembles motivational groups such as the Landmark Forum, the Sterling Institute of Relationship and Lifespring. It also is reminiscent of the “human potential” training of the 1970s, with a few Scientology-like elements and parallels to EST, the much-criticized groupthink program founded by Werner Erhard. Unlike EST, which famously discouraged students from using the bathroom during sessions, Executive Success offers plenty of breaks. Students pay up to $10,000 for five days of lectures and intense emotional probing in daily 13-hour cram sessions. They remove their shoes for class, learn obscure handshakes and wear patented colored sashes in dozens of different variations that signify rank in the organization. When a higher-ranking student enters the room they must stand to show respect. They are taught to bow to one another and to “Vanguard.” When he makes a rare appearance, Elvis-like, students rush up to him. Some ex-clients say they have seen him greet each woman with a kiss on the mouth, although Raniere denies this.

Once a day the attendees recite a 12-point mission statement written by Raniere. (Sample: “There are no ultimate victims; therefore, I will not choose to be a victim.”) It is apocalyptic in tone, with the occasional grammatical error–his genius notwithstanding. The world is full of people who try to “destroy each other, steal from each other, down each other or rejoice at another’s demise.” Thus, he writes, “it is essential for the survival of humankind” that the world’s wealth and resources be controlled by “successful, ethical people”–i.e., those trained at Executive Success.

It is quite a sales job, one that comes naturally to this corporate Svengali. Born in Brooklyn and bred in the suburbs, Raniere has a flair for promotion, like his adman father. An old bio labels Keith “one of the top three problem solvers in the world.” His current Web site quotes Albert Schweitzer, Margaret Mead–and himself. “Humans can be noble. The question is: Will we put forth what is necessary?” he writes, concluding that his program “represents the change humanity needs in order to alter the course of history.”

Raniere claims he spoke in full sentences when he was a 1-year-old, taught himself high school math in 19 hours when he was 12 and, by 13, had learned three years of college math and several computer languages. As a boy he read an Isaac Asimov sci-fi novel about a brilliant scientist who knew his galaxy was in irremediable decline and had reduced all human behavior to elegant mathematical equations. It inspired Raniere later to try to do the same. After graduating from Rensselaer Polytechnic Institute in Troy, N.Y. in 1982, with majors in physics, math and biology, he went to work in computer programming and consulting.

On the job he began to nurture his notion of unalloyed self-interest as the path to ethical behavior. He felt employees too often took jobs they didn’t like and made decisions they didn’t believe in. A more ethical world, he reasoned, would consist of people who understood their goals and pursued them. Raniere says he found inspiration in Rand’s books. The protagonists in Atlas Shrugged and The Fountainhead are über-individualists, aggressive and ruthless.

In 1990 Raniere decided to apply his theory to his new business, Consumers’ Buyline, a multilevel marketing program near Albany that promised lucrative commissions to old customers for recruiting new ones. He barnstormed the nation promoting discounts on groceries, dishwashers and even hotel stays, stoking crowds of a thousand pumped-up and profit-hungry people. “He was like a mythological figure–the guy with the 240 IQ was coming to town,” says Robert Bremner, a former distributor for the outfit.

Raniere says by the end of 1993 he had sold $1 billion in goods and services, employed 80 people and had a quarter-million believers paying him $19 a month to hawk his goods. He claims he was worth $50 million. Yet he appeared to carry no money, says Bremner, adding that Raniere seemed to sleep all day, rolled into his office around 10 p.m. and sometimes held meetings at 1 a.m. Business flagged, debt ballooned and customers complained. Regulators in 20 states began to investigate. In 1993 the New York attorney general filed a civil suit alleging Consumers’ Buyline was a pyramid scheme. Without admitting wrongdoing, Raniere settled for $40,000, of which he has paid only $9,000. He says he can’t pay the rest, though he also says his ample finances let him live on savings.

A year later Raniere created another multilevel outfit, National Health Network, which sold vitamins. He and his then-girlfriend, Toni Natalie, set up a health food shop in Clifton Park, N.Y. One day in 1997 Raniere met the woman who would become his business partner, Nancy Salzman. She is a nurse and therapist who has studied hypnosis and neurolinguistic programming, by which therapists examine and mimic a person’s language and speech patterns to alter behavior. (Raniere has studied this, too.)

Salzman had just gone through a tough time. She found Raniere to be riveting. He became her spiritual guide, and she became his most ardent follower. “There is probably no discovery since writing as important for humankind as Mr. Raniere’s technology,” she once wrote in a brochure. She ended up treating Raniere’s girlfriend, Toni Natalie, with therapy and lending her $50,000 for the health food business. When it flopped in 1999, a bitter battle ensued in U.S. bankruptcy court in Albany. Raniere sided with Salzman. Natalie moved away. Court records show Raniere sent Natalie verses from Paradise Lost, annotated (“Commits to evil for protection–stupid/weak.”). He drew a diagram that plotted her life and said she was in danger of careening down a “pride barrier” to a “dream death line.”

Raniere and Salzman don’t directly deny the assertions, but they say Natalie may have altered court documents–a charge Natalie says is outrageous. In January a U.S. judge said he found it “disturbing” to hear testimony that Raniere had had police sent to Natalie’s mother’s house and had made repeated threats to her and her family. Raniere has appealed several times, driving Natalie to the brink of a breakdown. “I can’t think. I can’t work. I can’t pay my bills,” she says.

In 1998 Salzman incorporated in Delaware the company that launched Executive Success Programs and applied for patents on Raniere’s behavior-modification “technology.” She and “Vanguard” agreed that he would get a share of the profits at some point. The company is now also known as Nxivm. Classes now are offered in Albany, Manhattan, Seattle, Boston and several cities in Mexico, with plans to expand. In August, in a squat, brown office complex near the Albany airport, 50 entrepreneurs and bankers sat on overstuffed couches, earnestly discussing words like “value” and “ethics.” Days begin at 8 a.m. with the “ESP handclap,” akin to using a gavel to open a court hearing. Students then go through sessions on “Money,” “Face of the Universe,” “Control, Freedom & Surrender” and more. They learn baffling and solipsistic jargon: “Parasites” are people who suffer, creating problems where none exist and craving attention. “Suppressives” see good but want to destroy it. Thus, a person who criticizes Executive Success is showing suppressive behavior.

In “Money,” students are taught that every dollar spent represents a portion of effort, and that “Vanguard identified the concept of giving and taking with integrity.” Coaches urge students to take each session several times at a cost of several thousand dollars–and to think of each dollar spent as a worthwhile representation of that effort. In a core piece of the program, known as “exploration of meaning,” teachers plumb students’ beliefs and backgrounds, looking for emotional buttons. People are encouraged to reveal a negative habit, describe how it benefits survival and pledge to replace it with a new one.

Confidentiality is sacrosanct. Students must sign a nondisclosure agreement and vow never to talk about what they learn. If they violate it, they are “compromising inner honesty and integrity.” In August Raniere sued a woman for, the suit claimed, divulging information. When a Forbes reporter asked to audit a session, the group’s lawyer presented a three-page confidentiality agreement forbidding the magazine to write about virtually anything seen or heard at the event. The reporter declined (and later was allowed to make a brief visit to the Albany site).

It is all too intense for some. After sleepless nights and 17-hour days of workshops, a 28-year-old woman from a prominent Mexican family says she began to have hallucinations and had a mental breakdown at her hotel near Albany. She went to a hospital and required psychiatric treatment. Her psychiatrist, Carlos Rueda, says in the last three years he has treated two others who have taken the class; one had a psychotic episode.

Stephanie Franco, a New Jersey social worker, spent $2,160 plus expenses for a five-day class in Albany at the suggestion of her half-brother, an executive at a family apparel company (Lollytogs and other brands). Other relatives joined, but Franco became concerned about the group’s rituals and its emphasis on recruitment. The family hired Rick A. Ross, a Jersey City, N.J. specialist in cults, to intervene, to no avail. He put information about the organization on his Web site–and promptly got sued by Raniere and Salzman, who accuse him of copyright violations. In September an Albany federal judge denied the organization’s initial request that Ross remove the information.

The family also hired John Hochman, a forensic psychiatrist who teaches at UCLA, who pored over the Executive Success manual and describes it thusly: “It is a kingdom of sorts, ruled by a Vanguard, who writes his own dictionary of the English language, has his own moral code and the ability to generate taxes on subjects by having them participate in his seminars. It is a kingdom with no physical borders, but with psychological borders–influencing how his subjects spend their time, socialize, and think.” In the lawsuit Raniere and Salzman made similar claims regarding alleged copyright violations against Hochman, as well as against Stephanie Franco.

Raniere and Salzman say they are careful to avoid accepting troubled students. In their world, those who question Raniere’s views simply don’t get it. He speaks slowly and methodically, with digression upon digression, using words he has defined for himself and then pausing to explain each term. You might think it pure genius. Or maybe horse manure.

Still, many disciples swear by Vanguard. Several students have achieved a high enough rank to qualify for a 20% commission on their new recruits. But most students are in it for the coaching. Sara Bronfman, Edgar Sr.’s 26-year-old daughter, says she started taking classes at the end of 2002 after her marriage fell apart. She was living in Belgium and heard about the class from a family friend. She marveled at how much Raniere was able to teach her. Sara has since been promoted to the rank of coach; she now works full time for Executive Success.

Sara and other devotees are talking about erecting centers in Australia and elsewhere. Raniere has lined up private investors to pay for a $15 million, 75,000-square-foot building near Albany. As originally designed, the building was to emerge from a stone foundation under a six-sided, glass roof. It is meant to be a tribute to civilization–another step in the mission to spread Vanguard’s gospel around the world. “I don’t know how much you know about my family,” Sara Bronfman says, admiring the silky cloth around her chest, “but, coming from a family where I’ve never had to earn anything before in my life, [it] was a very, very moving experience for me to be awarded this yellow sash. It was the first thing that I had earned on just my merits.”